I’ve been told that the best way to maintain some degree of good health in old age is to keep moving. However difficult it may be to stretch muscles today that yesterday flowed effortlessly, it is far better than falling prey to the sedentary slide into complete immobility. That lesson rang particularly true for this old state’s economy as I perused some basic economic vital signs recently.

Considering employment as the most basic indicator of overall economic health, it is important to remember that – at least in the private sector – movement in the number of jobs is the result of the interplay of five possible sources. On either extreme are births and deaths – new firms start up (or move to the state) and hire workers and old (and sometimes, unfortunately, young) firms die (go out of business) and lay people off. Next are growing and declining firms – existing firms that expand by adding workers or contract by laying people off. In the middle are those firms who (I won’t call them sedentary) maintain a stable, unchanging level of employment. The overall economy’s total employment trend is the net result of these internal business changes.

It is striking, therefore, to discover over the past 10 years – a period that contains the last few years of the housing bubble, the resulting Great Recession collapse and the slow recovery since 2009 – that the largest category of businesses and the only category whose share of all businesses has increased over this whole time period is that unchanging middle. In 2005, 52 percent of all private firms in Maine (23,482 businesses) held their employment steady, neither adding nor reducing their total employment. (Note: Many of these firms undoubtedly had some turnover during the year, with some people leaving and others joining; they simply ended the year with the same net employment total as they had at the beginning.) In 2014, 55 percent of all Maine private firms (25,575 businesses) had no net employment change.

Next, consider the number of businesses that either expanded or reduced their total employment over a given year. Interestingly, both of these groups followed the up and down pattern of the recession. In 2005, 8,206 Maine firms expanded employment. By 2009, the number of employment-expanding firms had dropped to 7,310. Since then, happily, their number has risen back up to 8,258. Similarly, the number of employment-reducing firms rose from 8,465 in 2005 to 8,770 in 2008 and then fell to 8,017 in 2011. Unfortunately, their number has jumped since then, rising steadily to 8,374 in 2014.

In sum, the nature of the slow-growth recovery is not slow growth across the board, but the inability of some firms to sustain the initial recovery begun in 2009-11 into 2012-14.

Now, consider the firms on either end of the growth spectrum – those opening and closing their doors. As would be expected, the number of firms closing followed the general outline of the business cycle –rising from 2,320 in 2005 to 2,559 in 2008 and then falling back to 2,173 in 2013. Unfortunately, that number jumped back to 2,179 in 2014, indicating that the anemic recovery is now beginning to take its toll on firms that are apparently struggling to stay afloat. This rise in the number of firms closing may reflect a lagged effect of the rise in the number of firms contracting employment that began in 2011.

Finally, and most importantly, consider the birth of new employment-creating firms. In 2005, there were 2,405 such firms in Maine, and they created 9,887 jobs. By 2008, that number had jumped to 2,490 firms that created 9,329 jobs. Since then, however, their number has dropped steadily to 2,272 firms in 2014. And the number of jobs these new firms created dropped to 6,888.

On the whole, the simplest way to look at the economic recovery in Maine is to say first that it has come more from the stemming of job loss than from an increase in job gains and, second, that what job gains we have enjoyed have come increasingly from the expansion of existing businesses rather than from the opening of new employment-creating businesses. The “healthy economy” conclusion from this seems obvious. We need to do a far better job of new business creation (be those businesses totally new or new to Maine), and we need to nurture those businesses through their first few years so that they reach a level of strength capable of sustaining continuous job expansion.

Charles Lawton is chief economist for Planning Decisions Inc. He can be reached at:

[email protected]